The rise in digital banking has proved to be a double edged sword for financial institutions as there is a great focus from cyber criminals targetting this platform to steal consumers’ financial information.
While the benefits and opportunities presented by digital financial services are clear and proven, according to KPMG’s Consumer Loss Barometer –The economics of trust report, 49 percent of consumers from Malaysia have had their financial information compromised, higher than the global average of 37 percent. The study further revealed that 69 percent consumers globally reporting concerns about their technology being compromised. Respondents in Malaysia are particularly concerned about their apps (95 percent), Wi-Fi (82 percent) and cloud (77 percent) being compromised.
KPMG’s study delved deeper into the economics of trust within the Financial Services sector, and found that 40 percent of consumers in Malaysia believe their financial institutions should have full or joint responsibility for ensuring that mobile devices used for mobile banking are secured.
Adrian Lee, Head of Financial Services at KPMG in Malaysia, urge financial institutions to show that they take the security of their customer’s information seriously, both in their customers’ broader security needs and in their interactions with them.
“Whether or not financial institutions regard it as their responsibility, it is something that they need to be very cognisant about or they run the risk of losing their customers’ trust, which is a priceless commodity. The shift towards digital banking is happening at great speed. A key gateway that promotes this trend is mobile devices because they are seen as a convenient way to cater to potential customers within the unbanked population. Financial institutions that are able to ensure trust will drive customer loyalty and naturally become the preferred choice in this digital age,” says Adrian.
In evince of the proliferation of digital banking trends in Malaysia, Bank Negara had reported that the penetration rate of internet banking and mobile banking subscribers stood at 91.9 percent and 33 percent respectively in February 2019.
Though cash is still Malaysia’s preferred mode of payment, the rise in digital payments demonstrate positive upward trends. Based on the transaction value data recorded for 2018 by Bank Negara Malaysia, internet banking transactions were valued at RM7.6 trillion, mobile banking at RM100.1 billion and e-money at RM11 billion.
Interestingly, KPMG’s study found that 96.8 percent of respondents globally would be willing to remain with their financial services provider if their financial information had been breached, provided the organization took swift and effective measures to address their concerns. This also shows that consumers accept the reality that cyberattacks cannot be completely avoided.
According to Adrian, this sentiment reveals that consumers still trust their financial institutions to be an authoritative figure. It would behove financial institutions well to enhance consumer trust by being more transparent about the data they collect, as well as to proactively demonstrate measures that are put in place to protect the consumers’ infomation.
“Consumers are constantly revising upward their expectations on how organizations deliver digital products and services, and expect security as integral to their experience. Hence, financial institutions cannot afford to be complacent and take their customers trust for granted. To do so would invite the inevitable result of reputational damage and financial loss. Maintaining trust in the digital age is becoming a differentiator for those able to act and demonstrate an understanding of their consumer’s concern,” concludes Adrian.